Homogeneity in Housing Development: Benefits for Investors Over Residents

Sofia Borushkina and Aleksei Kiselev

Journal of Political Institutions and Political Economy, 2024, vol. 5, issue 1, 153-177

Abstract: per seLoosening building regulations may alleviate some supply constraints and enhance housing affordability; however, allowing the construction of smaller and cheaper housing also leads to increased homogeneity. This homogeneous housing attracts increased interest from investment-driven buyers, as we demonstrate using Moscow’s case, a largely unregulated market with a homogeneous housing construction. Using data on newly built units, we find that speculative apartment reselling occurs more frequently in more homogeneous development projects. Employing a search and matching model, we demonstrate that higher homogeneity , while lowering market prices through poorer expected match quality, simultaneously increases investors’ bargaining power during resales. Our findings indicate that the presence of investment-driven sellers motivates developers to produce more homogeneous units at the expense of regular homebuyers’ welfare. In conclusion, we stress the importance of housing typology for policy outcomes.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlpip:113.00000097

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